In this day and age being paid using Bitcoins can be a confusing and perplexing and even a daunting experience. Yet current buzz is that the Bank of Canada is considering the advantages of using so called encrypted-currencies, notably Bitcoin. Canadian companies may be able to benefit in various ways by accepting bitcoin and then in turn exchanging those for Canadian dollars.
What should business owners be thinking about cryptocurrencies today and into the next year? Would it ever be advantageous to pay your employees or refund your customers with bitcoins? You might want to check out the Bitcoin Alliance of Canada which explores these type of topics.
The Bitcoin Alliance website states it is: “Dedicated to raising awareness of bitcoin among Canadian consumers, merchants, and policy makers; to promoting bitcoin adoption in Canada; and to furthering study and research in bitcoin.”
The need for bitcoin today
This complex issue can be boiled down to some basic questions:
“What percentage of people are aware of bitcoin at this time?” “What is the general impression and trust of bitcoin as an alternative currency?” “What is the real benefit for a company that isn’t involved in bitcoin as of yet?”
The answer is, unless your customers already believe and and feel comfortable with bitcoin, then otherwise results won’t be so good or ‘worth it’.
However there are some companies that are beginning to trade with bitcoins. For example, the electronics store NewEgg began accepting bitcoins from Canadian customers in June 2014. It even offered bitcoin-only deals for Black Friday. Also, Overstock.com started accepting bitcoin about a year ago and they now process about $15,000 per day in the encrypted currency.
Canadian examples are: BitDeals.ca, Best Sleep Centre, and hundreds of smaller business ranging from restaurants, coffee shops, dentists, butchers, auto supply stores, and beauty spas and others. You can view a more extensive listing of them here.
There are some good reasons to offer bitcoin payment. A customer may feel good buying a product (or service) that is shipped and to make the payment without having to be send private payment information, that they may fear will eventually get leaked somewhere.
Even though Canadian credit cards use chip & PIN authentication, they are still inherently vulnerable for cardholder-not-present-transactions such as those conducted online.
The Canadian Bankers Association reported an 11% increase in online credit and debit card fraud in 2013. The well known Home Depot credit card breach has affected many Canadians, who subsequently experienced a big wave of credit card fraud.
Bitcoin and taxation
There are some fees that bitcoin can reduce. Credit card transactions carry overhead about 1.5%, as has been recently fixed of of April 2015. But 1.5% is still steep isn’t it?
International companies also stand to gain. They can save 7-9% like Overstock is doing right now because they are not having to deal with currency conversions from country to country.
And by working with a bitcoin payment processor, companies can accept bitcoin payments without actually holding any of it. Firms like US-based BitPay take payments in bitcoin and can then then convert them to cash currency so that the merchant doesn’t have to handle the digital currency.
The best way to start accepting bitcoin payments
The typical first step for many companies will be to offer bitcoin as a payment option for their customers; so that the merchants can take advantage of the cost and fraud reduction. Payroll in bitcoin maybe an option for your employees, if you learn how to set up a bitcoin wallet and your accountant is versed with the tax issues.
You might think about paying your employees in bitcoin. There isn’t a distinct advantage in doing that however. But there already are distinct advantages for companies who deal mostly in online sales as mentioned earlier.
Those who aren’t considering it, and those perhaps who scared away by tax issues, should reconsider bitcoin as a viable option. But for now at least, paying your staff with it should be left to the to the enthusiasts.
Should we at 4GoodHosting.com accept bitcoin payments? Just let us know!